Hudson v. Wells Fargo & Company et al, No. 4:2021cv08296 - Document 47 (N.D. Cal. 2022)
Court Description: ORDER GRANTING 13 and 14 MOTIONS TO DISMISS AND DENYING 35 MOTION TO STRIKE by Judge Haywood S. Gilliam, Jr. Amended Complaint due by 8/12/2022. (bns, COURT STAFF) (Filed on 7/13/2022)Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
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Hudson v. Wells Fargo & Company et al Doc. 47 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 KURT L. HUDSON, Plaintiff, 8 v. 9 10 WELLS FARGO & COMPANY, et al., ORDER GRANTING MOTIONS TO DISMISS AND DENYING MOTION TO STRIKE Re: Dkt. Nos. 13, 14, 35 Defendants. 11 United States District Court Northern District of California Case No. 21-cv-08296-HSG 12 Pending before the Court are Defendants’ motion to dismiss and motion to strike. See Dkt. 13 14 Nos. 13, 14, 35. The Court held a hearing on April 28, 2022. See Dkt. No. 44. For the reasons 15 detailed below, the Court GRANTS the motions to dismiss and DENIES the motion to strike. 16 17 I. BACKGROUND Pro se Plaintiff Kurt L. Hudson brings this putative class action against Defendants Wells 18 Fargo Bank, N.A. (the “Bank”) and Wells Fargo & Company (the “Holding Company”). See Dkt. 19 No. 1 (“Compl.”). 20 According to the complaint, Plaintiff, an Illinois resident, obtained a mortgage loan from 21 the Bank in 2005 for a second home in Florida. Compl. ¶ 63. Due to various hardships brought 22 on by the 2008 recession, Plaintiff defaulted on his monthly mortgage payments. Id. at ¶¶ 66–76. 23 Plaintiff applied to the Bank for a loan modification under the Home Affordable Modification 24 Program (“HAMP”) and the National Mortgage Settlement (“NMS”), which Congress passed to 25 keep people struggling to pay their mortgage in their homes. Id. at ¶¶ 2, 68. The Bank denied the 26 modification application. Id. Plaintiff alleges that the Bank failed to fulfill its fiduciary duties 27 because it did not disclose errors in its loan medication software. Id. at ¶¶ 172, 175. Plaintiff 28 suggests that these errors led to the wrongful denial of his HAMP modification and foreclosure on Dockets.Justia.com 1 his property in 2015. See id. at ¶ 178. In its reply brief, the Bank acknowledges that it publicly disclosed the errors in its loan 2 3 modification software, which ultimately resulted in denials for certain borrowers. Dkt. No. 13 at 4 2. The Bank voluntarily initiated a remediation program and sent letters, some including checks, 5 and offered mediation to impacted borrowers. Id. However, Plaintiff admits he was not among 6 those who the Bank contacted to participate in the remediation program. Compl. ¶ 11. 7 Nevertheless, Plaintiff alleges that the Bank denied his loan modification due to its faulty software 8 program. Id. at ¶¶ 25, 50. Based on these facts, Plaintiff brings nine causes of action, on behalf of himself and a United States District Court Northern District of California 9 10 putative class, against the Bank and the Holding Company: (1) “Negligent and Gross Negligence 11 Breach of Contract,” (2) “Violation Of California’s Unfair Competition Law,” (3) “Violation Of 12 Florida’s Deceptive And Unfair Trade Practices Act,” (4) “Violation Of Florida’s Unauthorized 13 Practice of Law Statute,” (5) “Breach of Fiduciary Duty,” (6) “Fraudulent Concealment,” 14 (7) “Fraud On The Florida State And Appellate Courts,” (8) “Concealment Fraud And The 15 California and Iowa Federal Courts,” and (9) “Revival of Plaintiff’s and SubClass Members’ Rico 16 Complaint.” See generally id. Plaintiff contends that he and other putative class members 17 suffered injury, damage, and loss, and seeks punitive damages and reasonable attorneys’ fees and 18 costs. See id. at ¶ 320. Defendants now move to dismiss Plaintiff’s complaint. See Dkt. Nos. 13, 19 14. Defendants also move to strike the excess pages of Plaintiff’s overlong opposition brief. See 20 Dkt. No. 35. 21 22 II. LEGAL STANDARD To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead “enough facts to state 23 a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 24 (2007). A claim is facially plausible when a plaintiff pleads “factual content that allows the court 25 to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft 26 v. Iqbal, 556 U.S. 662, 678 (2009). In reviewing the plausibility of a complaint, courts “accept 27 factual allegations in the complaint as true and construe the pleadings in the light most favorable 28 to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th 2 1 Cir. 2008). Nevertheless, courts do not “accept as true allegations that are merely conclusory, 2 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 3 F.3d 1049, 1055 (9th Cir. 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 4 (9th Cir. 2001)). Additionally, “[p]leadings must be construed so as to do justice.” Fed. R. Civ. P. 8(e). United States District Court Northern District of California 5 6 “[A] pro se complaint, however inartfully pleaded, must be held to less stringent standards than 7 formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (quotation 8 omitted). However, even a “liberal interpretation of a . . . complaint may not supply essential 9 elements of the claim that were not initially pled.” See Ivey v. Bd. of Regents of Univ. of Alaska, 10 673 F.2d 266, 268 (9th Cir. 1982). “[P]ro se litigants are bound by the rules of procedure,” 11 Ghazali v. Moran, 46 F.3d 52, 54 (9th Cir. 1995), which require “a short and plain statement of 12 the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a). 13 III. DISCUSSION 14 A. 15 Plaintiff claims to represent a class of approximately 1,152,000 members as part of his Class Allegations 16 lawsuit. See Compl. ¶ 12. However, the Bank correctly points out that “pro se plaintiffs cannot 17 serve as putative class representatives.” See Dkt. No. 13 at 1; see also C.E. Pope Equity Trust v. 18 United States, 818 F.2d 696, 697 (9th Cir. 1987) (holding that pro se litigant may not appear as an 19 attorney for others); see also Horn v. Foulk, 2008 WL 4457683, at *2 (N.D. Cal. Sept. 29, 2008) 20 (dismissing putative class action because “[p]ro se plaintiffs are not adequate class representatives 21 able to fairly represent and adequately protect the interests of the class”). 22 The Court notes that Plaintiff has expressed his intentions to obtain counsel. See Dkt. No. 23 28 (“Opp.”) at 32. In his opposition brief, he said that he anticipated finding counsel by February 24 2022. Id. As of the date of this order, however, Plaintiff still is not represented by counsel. 25 Because Plaintiff may only bring this case on behalf of himself, the Court GRANTS the motion to 26 dismiss claims brought on behalf of a putative class, without prejudice to the reassertion of those 27 claims if Plaintiff retains counsel. 28 // 3 United States District Court Northern District of California 1 B. Wells Fargo Bank 2 As a threshold matter, the Bank asserts that the Court lacks personal jurisdiction over it. 3 See Dkt. No. 13 at 4–6. A plaintiff may invoke either general or specific personal jurisdiction. 4 Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015). “[G]eneral jurisdiction requires 5 affiliations so continuous and systematic as to render the foreign corporation essentially at home 6 in the forum State, i.e., comparable to a domestic enterprise in that State.” Daimler AG v. 7 Bauman, 571 U.S. 117, 133, n.11 (2014) (quotations omitted). Specific jurisdiction, on the other 8 hand, exists if: (1) the defendant has performed some act or consummated some transaction with 9 the forum by which it purposefully availed itself of the privilege of conducting business in 10 California; (2) the plaintiff’s claims arise out of or result from the defendant’s forum-related 11 activities; and (3) the exercise of jurisdiction is reasonable. Rio Properties, Inc. v. Rio Int’l 12 Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 13 462, 475–76 (1985)). 14 “When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears 15 the burden of demonstrating that the court has jurisdiction over the defendant.” Pebble Beach Co. 16 v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Although the court “may not assume the truth of 17 allegations in a pleading which are contradicted by affidavit,” CollegeSource, Inc. v. 18 AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011) (quotation omitted), the court must 19 resolve conflicts between the facts contained in the parties’ affidavits in plaintiff’s favor. See 20 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). When the Court 21 does not conduct an evidentiary hearing, the plaintiff need only make a prima facie showing of 22 facts supporting personal jurisdiction to avoid dismissal. See Myers v. Bennett Law Offices, 238 23 F.3d 1068, 1071 (9th Cir. 2001). 24 Here, Plaintiff acknowledges that the Bank is headquartered in South Dakota. See Compl. 25 ¶ 29. He also appears to recognize that the alleged conduct at issue in this case occurred outside 26 of California: Plaintiff is an Illinois resident, his house is located in Florida, the Bank’s mortgage 27 servicing business is located in Iowa, and the Bank’s computer servers are located in Florida. See 28 id. at ¶¶ 16, 63, 111. Plaintiff nevertheless asserts that the Court has personal jurisdiction over the 4 1 Bank because Defendants “conduct substantial business” in California. See Opp. at 33–34. Aside 2 from this conclusory sentence, however, Plaintiff offers no factual allegations to support this 3 contention. Plaintiff simply notes that “[t]he Bank has serviced hundreds of mortgages for 4 properties located in California.” See id. at 34. Even if true, Plaintiff does not explain how such 5 conduct somehow renders the Bank at home in California for purposes of general jurisdiction. 6 And to the extent that Plaintiff suggests such contacts may suffice for specific jurisdiction, this is 7 not a putative class action. Plaintiff’s claims in this case do not arise out of the Bank’s mortgage 8 services for any California properties. Rather, Plaintiff is an Illinois resident raising claims 9 concerning a mortgage on a Florida property. See Compl. ¶¶ 16, 63–80. 10 United States District Court Northern District of California 11 The Court finds that Plaintiff has not presented sufficient information to show that the Court has personal jurisdiction over the Bank, and GRANTS the motion to dismiss on this basis. 12 C. 13 Unlike the Bank, the Holding Company’s principal place of business is California. See 14 Compl. ¶ 17. However, the Holding Company argues that Plaintiff has failed to allege that it is 15 responsible for any of the alleged conduct in this case. See Dkt. No. 14 at 1. Critically, Plaintiff 16 alleges that the Bank—not the Holding Company—serviced his mortgage. See Compl. at ¶¶ 29, 17 63. Plaintiff confirmed these allegations in his opposition brief, stating that “Wells Fargo 18 Bank foreclosed on the Plaintiff’s first mortgage . . . .” See Opp. at 36 (emphasis added). 19 However, throughout the complaint Plaintiff generally treats the Holding Company and the Bank 20 as the same entity, referring to them collectively as “Wells Fargo.” See, e.g., id. at ¶ 29. Plaintiff 21 notes that the Bank is a subsidiary of the Holding Company, and appears to suggest that as the 22 parent company, the Holding Company should also be held responsible. See Opp. at ¶ 1; see also 23 Compl. at ¶¶ 29, 63. 24 Holding Company A parent company is not automatically liable for the acts of its subsidiaries. See U.S. v. 25 Bestfoods, 524 U.S. 51, 68–69 (1998) (noting that “corporate personalities” generally “remain 26 distinct”); see also Toho–Towa Co. v. Morgan Creek Prods., Inc., 217 Cal. App. 4th 1096, 1107 27 (Cal. Ct. App. 2013) (“Corporate entities are presumed to have a separate existence, and the 28 corporate form will be disregarded only when the ends of justice require this result.”). As the 5 1 Ninth Circuit has cautioned, “[t]he mere fact of sole ownership and control does not eviscerate the 2 separate corporate identity that is the foundation of corporate law.” Katzir’s Floor & Home 3 Design, Inc. v. M-MLS.com, 394 F.3d 1143, 1149 (9th Cir. 2004). Indeed, “[e]ven if the [parent 4 company] is entitled to all of the corporation’s profits, and dominated and controlled the 5 corporation, that fact is insufficient by itself to make the [parent] personally liable.” Id. United States District Court Northern District of California 6 California law only recognizes “alter ego” liability to hold a parent company responsible 7 for its subsidiaries in discrete circumstances. See In re Schwarzkopf, 626 F.3d 1032, 1038 (9th 8 Cir. 2010) (citing Wood v. Elling Corp., 20 Cal. 3d 353, 365, n.9 (Cal. 1977)). First, there must 9 be “‘such a unity of interest and ownership that the individuality, or separateness, of the 10 said . . . corporation has ceased.’” Id. (quoting Wood, 20 Cal. 3d at 365, n.9). Second, 11 “‘adherence to the fiction of the separate existence of the corporation [must] sanction a fraud or 12 promote injustice.’” Id. Unity of interest and ownership is a fact-intensive analysis that requires 13 the Court to: 14 15 16 17 18 consider numerous factors, including inadequate capitalization, commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, use of one as a mere conduit for the affairs of the other, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers. 19 See Virtualmagic Asia, Inc. v. Fil-Cartoons, Inc., 99 Cal. App. 4th 228, 245 (Cal. Ct. App. 2002). 20 Plaintiff has failed to provide sufficient factual support for his contention that the Holding 21 Company should be held liable for the Bank’s alleged conduct. Plaintiff alleges that the Holding 22 Company “exercises control over the Bank’s management team and has the authority to hire and 23 fire the Bank’s managers, set company policies and establish the Bank’s business strategy.” See 24 Compl. at ¶¶ 29, 244–45. This is not, on its own, sufficient to establish alter ego liability. 25 Perhaps recognizing the difficulty of establishing alter ego liability, Plaintiff suggests in 26 his opposition brief that the Holding Company also participated in the wrongdoing. See Opp. at 1. 27 But Plaintiff does not explain in the complaint what misconduct the Holding Company allegedly 28 engaged in. See generally Compl. Because Plaintiff has not sufficiently alleged that the Holding 6 United States District Court Northern District of California 1 Company is liable for the Bank’s misconduct or that it engaged in any misconduct itself, the Court 2 GRANTS the motion to dismiss on this basis. 3 D. 4 In a separate motion, Defendants also ask the Court to strike the excess pages of Plaintiff’s 5 opposition to the motions to dismiss. See Dkt. No. 35. Plaintiff’s brief is 44 pages long. See Opp. 6 Plaintiff responds that he went over the page limit inadvertently, due to vision problems. See Dkt. 7 No. 38 at 2. While Plaintiff clearly exceeded the page limit in violation of the local rules, the 8 Court in its discretion DENIES Defendants’ motion to strike. The Court cautions Plaintiff that 9 notwithstanding his pro se status, he will be expected to comply with all applicable federal rules, Motion to Strike 10 civil local rules, and standing orders in future. 11 IV. CONCLUSION Accordingly, the Court GRANTS the motions to dismiss and DENIES the motion to 12 13 strike. Despite the deficiencies the Court identified above, the Court cannot say at this stage that 14 amending the complaint would be futile. See Lucas v. Dep’t of Corr., 66 F.3d 245, 248 (9th Cir. 15 1995) (“[A] pro se litigant is entitled to notice of the complaint’s deficiencies and an opportunity 16 to amend prior to dismissal of the action.”); Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012) 17 (“[A] district court should not dismiss a pro se complaint without leave to amend unless it is 18 absolutely clear that the deficiencies of the complaint could not be cured by amendment.”) 19 (quotations omitted). Therefore, Plaintiff shall file any amended complaint by no later than 20 August 12, 2022. Failure to file an amended complaint by this deadline may result in the 21 dismissal of the action in its entirety without further leave to amend. In addition, Plaintiff’s 22 amended complaint will be dismissed if he does not correct the deficiencies the Court has 23 identified in this order. 24 // 25 // 26 // 27 // 28 // 7 1 The Court notes that the Legal Help Center at both the San Francisco and Oakland Federal 2 Courthouses provides free information and limited-scope legal advice to pro se litigants in civil 3 cases. Services are provided by appointment only. An appointment may be scheduled by calling 4 (415) 782-8982 or emailing FedPro@sfbar.org. 5 6 7 8 IT IS SO ORDERED. Dated: 7/13/2022 ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8
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